European Stock Charts Flash a Warning Signal

Prices across the continent rebounded Monday, but many bourses are in a declining trend.

Value investors have been singing the praises of European equities, but charts of many bourses across the continent show weak technicals. Indeed, some have been in retreat since October and continue to lag the U.S. market.

To be sure, Europe is not one homogeneous market. The German benchmark DAX index remains in a solid rising trend (see Chart 1). Strong growth in the euro zone's manufacturing sector – its highest in 31 months – was...